India-New Zealand Free Trade Agreement (FTA)
India's recent negotiation closure for an FTA with New Zealand highlights a strategic shift in New Delhi's trade policy. Unlike previous mega trade pacts, this agreement emphasizes sectoral caution and strategic clarity.
Trade Ambitions and Current Statistics
- Total trade in goods and services between India and New Zealand was slightly over $2 billion in FY25, considered modest by India's trade standards.
- Both nations aim to double this trade within five years, not merely for the headline number but for the strategic pathways designed to achieve it.
Key Features of the Agreement
- Mobility Clause:
- Allows 5,000 Indian professionals to be eligible for three-year work visas in sectors like IT services, healthcare, education, and traditional medicine.
- Goes beyond precedents like the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA), which offers only 1,000 "working holiday" visas annually.
- Education and Work Opportunities:
- New Zealand allows uncapped entry for Indian students into its higher education institutions with at least 20-hour weekly part-time work entitlement.
- Tariff Exclusions:
- About 30% of India's tariff lines are excluded to protect rural livelihoods, including dairy products, animal products other than sheep meat, and certain vegetable products.
- This exclusion is significant as dairy constitutes about a third of New Zealand's global exports.
- Investment Commitments:
- New Zealand commits to investments in India totaling approximately $20 billion over 15 years, moving beyond a narrow trade in goods perspective.
Implementation and Future Prospects
If ratified by New Zealand's Parliament, the FTA could be operational within seven months. However, India's challenge is to tackle non-tariff barriers such as the recognition of Indian educational qualifications and quality standards. The success of this agreement could set a template for future FTAs.
